November 29, 2012

Wal Mart et al. - Retailing for Holiday Safety

As always this time of year, there are boatloads of stories about callous toy manufacturers insisting that U.S. children have available to them playthings that might harm or kill them. (See, e.g., surveys from the consumer group PIRG and from the American Association for Justice.) Just the morning, the Today Show devoted an entire segment to Consumer Product Safety Commission and federal law enforcement efforts to keep unsafe toys from getting onto shelves at Wal Mart and other retailers, and into the tiny hands – and stomachs- of our nation’s kids. (See below.)

But what’s been interesting this year is that in addition to toy safety stories, there have been a number of stories focusing on worker conditions at retail outlets - and even more sadly, on the hazardous overseas plants supplying U.S. consumers with cheap goods. Let’s start with this country.

You may have heard about the 100-city Thanksgiving Day and Black Friday Wal Mart strike prompted by working conditions, including forcing workers to work Thanksgiving Day. In addition, there’s an article today in The Recorder about class-actions against Wal Mart and K-Mart by cashiers who have been denied “suitable seating”, in violation of California law.
This week, the Ninth Circuit Court of Appeals “agreed to review class certification of roughly 22,000 Wal-Mart cashiers in California who claim they were denied a place to sit in violation of state labor regulations.… Meanwhile, U.S. District Judge William Alsup concluded a bench trial last week in a similar case against Kmart Corp. That case focused on 65 cashiers employed by one Kmart store in the Central Valley city of Tulare and maximum penalties of less than $500,000.”

But when it comes to tales of outright calamity and heartbreak, nothing comes close this holiday season to the fire last week at a Bangladesh clothing factory, which killed 112 people as 1,400 workers (70% women) were trapped inside a building with locked doors and no emergency exists:

An Associated Press reporter at the factory discovered children's shorts with Wal-Mart's Faded Glory label, hooded sweat shirts emblazoned with Disney cartoons, shorts with hip-hop star Sean Combs' ENYCE tag, and sweaters from the French company Teddy Smith and the Scottish company Edinburgh Woollen Mill.

Sears was among the companies listed in the account books.
Wal-Mart said it received a safety audit that showed the factory was "high-risk" and had decided well before the blaze to stop doing business with Tazreen. But it said a supplier had continued to use Tazreen without authorization. The retailer said it stopped doing business with the supplier Monday.
Sears said it learned after the blaze that its merchandise was being produced there without its approval through a vendor that has since been fired.

Walt Disney Co., which licenses its characters to clothing makers, said its records indicate that none of its licensees have been permitted to make Disney-brand products at the factory for at least a year.

Harold Meyerson at the Washington Post wrote of the fire and these corporate excuses in a poignant column:

In its gruesome particulars — locked doors, no emergency exits, workers leaping to their deaths — the blaze seems a ghastly centennial reenactment of the Triangle Shirtwaist fire of 1911, when 146 workers similarly jumped to their deaths or were incinerated after they found the exit doors were locked.
…

If this were an isolated incident of Wal-Mart denying responsibility for the conditions under which the people who make and move its products labor, then the Bangladeshi disaster wouldn’t reflect quite so badly on the company. But the very essence of the Wal-Mart system is to employ thousands upon thousands of workers through contractors and subcontractors and sub-subcontractors, who are compelled by Wal-Mart’s market power and its demand for low prices to cut corners and skimp on safety. And because Wal-Mart isn’t the employer of record for these workers, the company can disavow responsibility for their conditions of work.

This system isn’t reserved just for workers in faraway lands: Tens of thousands of American workers labor under similar arrangements. Many are employed at little more than the minimum wage in the massive warehouses in the inland exurbs of Los Angeles, where Wal-Mart’s imports from Asia are trucked from the city’s harbor to be sorted and packaged and put on the trucks and trains that take them to Wal-Mart stores for a thousand miles around.
…

Other discount retailers — notably Costco and Trader Joe’s — pay their workers far more, train them more extensively, have much lower rates of turnover and much higher rates of sales per employee, according to a Harvard Business Review article by Zeynep Ton of the MIT Sloan School of Management. Costco is a very profitable business, but Wal-Mart maintains an even higher profit margin, which it achieves by underpaying its employees. The conservative economic blogger Megan McArdle estimates that if Wal-Mart held its profit margin down to Costco’s level, its average worker would make about $2,850 more each year — a considerable increase in a sector where workers’ earnings average less than $25,000 a year.
But Wal-Mart neither pays its own nor takes responsibility for those who make and move its wares.

For America’s largest private-sector employer, the emergency exits are always open.

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